Technology

Use technology to ease tax compliance

Developments in new technology such as tax software, real time reporting systems and data analytics have the potential to aid economies across the Middle East to improve their tax administration systems to the benefit of both taxpayers and tax authorities, experts say.

Citing the results of the 2019 edition of the annual 'Paying Taxes' report produced by PwC and The World Bank Group, experts say that tax authorities could do more to realise the full potential of new technology to reduce the tax compliance burden on taxpayers.

The report notes that the size of the gains in 2017 is relatively small in global terms. The fact that there has been little change to the global average, despite 113 economies introducing tax reforms over the same period, suggests reforms are limited in nature. While many economies have made considerable improvements in their tax systems in recent years, the findings also suggest that some economies are finding it difficult to implement online filing and payment due to the lack of IT infrastructure, cultural barriers and complex legislation.

The report showed that from a Middle East standpoint, the region has the lowest average time to comply - 144 hours compared to the global average of 237 hours. The average number of payments for the region is 17.1 payments, which is below the world average of 23.8 payments; while the average time to comply with a VAT refund is 28.6 hours and to obtain the VAT refund takes 44.1 weeks on average.

"When implemented strategically, new technology can drive considerable efficiencies for tax authorities and businesses alike. Yet, it is important to remember that improvements to tax systems do not come from technology alone. Simple, coherent, well-understood and properly administered tax systems can help to lower the barriers for businesses to move from the informal to the formal sector," said Andrew Packman, leader for tax transparency and total tax contribution at PwC.